Brent crude oil fell below $105 a barrel in whipsaw trading on Friday, following U.S. air strikes in Iraq that analysts said might lower the risk of oil supply disruptions from OPEC's second-largest producer.

Oil prices rose on reports that the United States was considering air strikes on the Islamic State fighters who have advanced across Iraq's semi-autonomous Kurdish region. But the rally halted on Friday after the Pentagon confirmed the military intervention in the north of the country, and traders digested the move.

Brent crude fell 50 cents to near $105 a barrel, off a weekly high of $106.85 hit earlier in the session.U.S. crude rose 31 cents to end at $97.65 a barrel, after trading as high as $98.45.

Both benchmarks inverted their upward trajectory in mid-morning trading, as initial alarm about escalating violence in Iraq gave way to the recognition that the U.S. intervention in the Kurdish region could secure oilfields not just in the north but in the more prolific oil producing region further south.

Putting further pressure on prices, OPEC's monthly report showed a modest 167,000 bpd increase in production for July and a slight downward revision to 2014 demand, pointing to more comfortable global supplies.